Item - 2024.EX12.3

The Executive Committee:

1.  Referred the Item back to the Chief Financial Officer and Treasurer and:

a. directed the Chief Financial Officer and Treasurer to report prior to the 2025 Budget Process on the following:

1. results of public communications and stakeholder engagement, in consideration of any other planned consultations, such as the Stormwater Charge and Water Service Charge;

2. refined estimates and design scenario(s) as applicable; and

3. final implementation plan for 2025, with consideration of any additional revenue tools secured as a result of negotiations with the Provincial and/or Federal Governments; and

b. requested the City Manager and the Chief Financial Officer and Treasurer to undertake a comprehensive parking inventory and report on any additional authorities needed to develop the report in Part 1.a. above, as needed.

At its meeting on September 6, 2023, as part of Item EX7.1: Updated Long-Term Financial Plan (LTFP), City Council directed staff to report back on the development of a levy on commercial parking within the City. It was requested that the report outline a recommended tax, collection and enforcement design, estimated revenues, and required timelines for implementation in 2025.

This report identifies and seeks Council’s endorsement on the guiding design principles of a commercial parking levy and provides information that responds to Council’s requests. Following the consideration of this report, staff will undertake the development of a comprehensive parking inventory and conduct additional engagement with stakeholders to further refine and finalize implementation plans, and report back with a status update in advance of the 2025 budget process.

To develop overall design principles, City staff engaged a third-party consultant, Access Planning Ltd., to advise on how to best advance a commercial parking levy, based on their previous experience and expertise in a related file in Vancouver. Access concluded that a commercial parking levy has sufficient policy and revenue rationale to introduce within Toronto and recommended keeping the rules and applicability of the parking levy as simple as possible during the launch. As the City collects more information on the economic and social impacts of the levy, further refinements to the program may be considered to optimize policy objectives.

As a result of this research, staff are recommending the following parking levy design principles in the application of a commercial parking levy:

1.    Apply a commercial off-street parking levy to the entire City of Toronto;

2.    Include both private and publicly owned or operated commercial properties;

3.    Include both unpaid and fee-paid parking facilities including surface parking, underground parking and parking garages;

4.    Include a minimum area threshold, which provides an automatic exemption for the first 300m2  for all properties (equivalent to approximately 10 parking spaces) to reduce the burden of the levy on small businesses; and

5.    Apply a two-zone rate structure based on geographic area:

a.    Zone A – Downtown & Central Waterfront

b.    Zone B – Entire City of Toronto, excluding Zone A.

The proposed parking levy will apply to properties within the Commercial tax class, and the levy will be calculated based on the total areal extent of the property that is used for parking multiplied by a per-square metre rate. An exemption from the levy will apply for the first 300 square metres for all properties.  In addition to the mandatory statutory exemptions from taxation established under Section 268 of the City of Toronto Act, it is recommended that the property tax exemptions of Section 3 of the Assessment Act also apply for various property types. Staff are also recommending refining the definition of “parking area” to exclude certain situations where parking is directly associated with a business use, e.g., vehicle  storage for certain commercial operations, as explained later in the report.

The effectiveness of billing and collecting a parking levy will rely on the City's ability to develop and maintain an accurate inventory of parking areas. As a next step, staff will continue to identify opportunities to compile this information using a combination of approaches and multiple data sources, as there is no single source of information available at this time. This may include geographic data, on-site inspections, data from the Municipal Property Assessment Corporation (MPAC), and owner-supplied information through self-reporting. As part of this report, staff are seeking authorization to engage with third-party resources, as required, to successfully complete the development of a parking inventory. Staff have previously advised that it may take up to 12-18 months to develop the inventory, modify billing systems, complete testing, and notify all commercial property owners in advance of implementation.

Implementation of a commercial parking levy is expected to impact stakeholders and economic and business activities. Following Council’s endorsement of the overarching design principles identified in this report, staff will further engage with the industry on potential impacts. Overall, the introduction of a parking levy is expected to have a positive impact on City priorities and objectives, including reducing congestion and positively contributing to climate action by encouraging Torontonians to use transit or other means to travel. The parking levy will also positively contribute to the City’s multi-year budgeting strategy and long-term financial sustainability. Preliminary estimates based on the proposed design principles indicate the City may generate gross revenues from $100 million to $150 million annually. These estimates have been reflected in the City’s enhanced multi-year budget modelling introduced in 2024 and are intended to offset one-time bridging actions applied to the 2024 budget that enabled critical investments in transit services.